Income Received in Singapore from Abroad
Under Section 10(25) of the Income Tax Act, income from outside Singapore is considered received in Singapore when it is:
a. remitted to, transmitted or brought into Singapore;
b. used to pay off any debt incurred in respect of a trade or business carried on in Singapore; or
c. used to purchase any moveable property brought into Singapore (e.g. equipment or raw materials connected to your business).
Section 10(25) will be applied to tax foreign income received in Singapore only if the income belongs to an individual who is resident in Singapore or an entity which is located in Singapore. Hence, non-resident individuals and foreign businesses which are not operating in or from Singapore can remit their foreign income to Singapore without being taxed on the income. This removes the concern that section 10(25) will discourage foreigners and foreign businesses from using Singapore’s banking and fund management facilities.
As an administrative concession, foreign income which is applied towards overseas investments without being repatriated to Singapore will not be treated as having been received in Singapore under section 10(25) at the point of reinvestment. This means that the taxing point of the foreign income is deferred till when the investment is realised and the proceeds are brought into Singapore. This is in line with the Government’s effort in promoting regionalization of Singapore’s businesses.
If you are subject to tax on foreign-sourced income, you will continue to be entitled to claim tax reliefs or credits available under section 50, 50A or 50B of the Income Tax Act in respect of the foreign tax paid or payable on such income. For more information, please refer to Foreign Tax Credit.